Why Oracle bought one of Canada’s secretly successful startups

I noticed them as soon as I got on the plane to San Francisco this past September: About a dozen young men in their mid-20s and early 30s, wearing stark black T-shirts that read, “I’m a modern marketing expert” on the back. We were among the Canadians en route to the annual conference put on by Salesforce.com, a large business software provider, but I’ll bet few if any of them knew their career journey would eventually take them into the arms of Salesforce.com’s biggest competitor.

Eloqua LogoThose men worked for Eloqua, the company acquired by Oracle on Thursday in a deal valued at US$871 million, or 23.50 a share. Few Canadians would ever have heard of Eloqua, and fewer still would realize that it was among the more successful startups on the U.S. market that launched in Toronto. Yet Eloqua’s success is a strong reminder that, Research in Motion’s challenges notwithstanding, Canada continues to spawn organizations that come to redefine where the action is in the global IT sector.

Eloqua makes what is called marketing automation software. These are tools that marketing departments can use to, among other things, send out e-mail messages to target customers who, if they open a message and click on a link, might become sales prospects.

Because so many people research products and services online now, and because they almost always comparison shop ruthlessly, the time it takes to get money out of a customer’s hands takes a lot longer than it once did. Marketing automation is supposed to help speed up the sales cycle, allow sales departments to get good leads and pull in all kinds of other data on consumers based on how they act online. Eloqua calls this behavior a customer’s “digital body language.”

Oracle's identity shift

Oracle started as a database company but has made so many acquisitions it now offers almost everything, but Eloqua represents a way for it to dominate the marketing automation space. Ray Wang, an analyst with Constellation Research, suggested that the deal could spur Salesforce.com and others to buy Eloqua’s rivals in order to stay competitive.

“The key issue is the battle for the CMO’s budget,” he said. CMO, of course, stands for chief marketing officer, a role which some predict will be spending more on technology than chief information officers in a few years’ time.

Much in the way that RIM changed the way the world thought about mobile communications, Eloqua was beginning to influence the way organizations of all kinds market themselves to the public.

The company grew far beyond its Toronto roots and later moved its head office to Vienna, Va. and issued an IPO last year. Oracle will mean even greater reach into the Fortune 500, but the trick will be weather Eloqua’s software will deliver on the promise of more effective ways of generating business demand. Most of us tend to hate the volume of e-mail we receive. When it’s clearly marketing material, we tend to like it even less. That’s why so many firms are looking for a way to improve the results of their marketing investments.

“The future is increasingly about driving real-time, highly personalized engagement with customers,” said Rob Bronson, an analyst with Forrester Research. “Those tech vendors without a strong software-as-a-service marketing automation strategy will find themselves increasingly irrelevant.”

Thanks to Eloqua, Oracle won’t have to worry about relevancy for a while. The next time marketing automation comes up, they can confidently claim to have been there, done that, and even bought the T-shirts.

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